REITs, InvITs, Raise Rs 18,658 Crore In April-September In FY24

This development followed after listed Infrastructure Investment Trusts (InvITs) raised funds worth Rs 2,596 crore in 2022-23, data from the Securities and Exchange Board of India (Sebi) stated.

A REIT is made up of a portfolio of commercial real estate assets, the majority of which are already leased out, while InvITs consists of a portfolio of infrastructure assets like highways, etc.

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Listed REITs and InvITs raised funds worth Rs 18,658 crore in the first half of the current fiscal on robust demand for infrastructure investment, lucrative returns, and helpful government policies, official data revealed. 

This development followed after listed Infrastructure Investment Trusts (InvITs) raised funds worth Rs 2,596 crore in 2022-23, data from the Securities and Exchange Board of India (Sebi) stated. The data also displayed that listed Real Estate Investment Trusts (REITs) failed to raise any funds during FY23, reported PTI. 

Market experts further believe that the momentum seen in REITs and InvITs would persist in the last six months of the current fiscal, i.e., from October 2023 to March 2024. Himanshu Kohli, co-founder of Client Associates, noted, “The fresh savings will continue similarly as has happened in the last six months, and the investments will continue to be towards InvITs as both the central government and the state governments continue to focus more on infrastructure development.”

The data revealed that about Rs 18,658 crore was raised via these emerging investment vehicles in the April to September period of 2023-24. This amount included Rs 12,753 crore raised through InvITs and Rs 5,905 crore collected via REITs. 

Karan Shetty, the co-founder of Claravest, stated many factors led to the massive increase in fundraisings such as favourable government policies, strong demand for investment in real estate, and the government’s focus on urbanisation and infrastructure development. 

Explaining other reasons for this boost, Feroze Azeez, deputy CEO, of Anand Rathi Wealth, noted that the “Regular income provided by REITs and InvITs as these trusts are required to distribute 90 per cent of their income to investors regularly, gives diversification benefit, provides liquidity benefits as the units trade on stock exchanges and increased awareness and investor interest about the instruments.”

Further, the report noted that Sebi has played a significant role in promoting REITs and InvITs in the country. Azeez added, “InvITs have been more popular than REITs in terms of fundraising, due to several factors as InvITs can invest in a wider range of assets than REITs, including roads, highways, bridges, railways, power transmission lines, renewable energy projects, and gas pipelines. Besides, InvITs are exempt from paying income tax at the trust level, which makes them more attractive to investors.”

Notably, REITs and InvITs are new concepts in the Indian market but have been a popular choice in the global markets for their lucrative returns and capital appreciation. A REIT is made up of a portfolio of commercial real estate assets, the majority of which are already leased out, while InvITs consists of a portfolio of infrastructure assets like highways, etc.